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Financial Rights E-flyer: February 2019

In this edition:

    1. What we do at the Financial Rights Legal Centre: advocate for debt waivers
    2. The Royal Commission: what happened and what it means
    3. What’s all the fuss about funeral insurance?
    4. Financial Rights joins the reconciliation movement
    5. The latest on ‘buy now pay later’ services
    6. Personnel changes at Financial Rights

1- What we do at the Financial Rights Legal Centre: advocate for debt waivers

In our E-flyers we like to give our colleagues and readers an insight into what we do and how we work at the centre. In previous editions we have explained common pitfalls in travel insurance and changes to debt recovery through NSW courts. This month we take a look at a recent case were we successfully pursued a debt waiver for a woman living in a crisis situation.

The name of our client and the company involved have been changed to protect our client’s identity.

A compassionate solution

Pat, a 63 year old Aboriginal woman, was referred to our Mob Strong Debt Help service by a friend. After a family breakdown and a reduction in her hours at work, Pat was unable to afford her private rental accommodation and having nowhere else to go, had been living in her car around Sydney for six months.

A financial counsellor and solicitors from Financial Rights jointly took on her case.

Initially we assisted Pat, who is on a Centrelink benefit, by talking with the Department of Housing about her application. We clarified what information Pat needed to support her application, and learned it could be between five and 10 years before she was granted public housing.  We then referred her on to community services better placed to assist with her housing predicament.

Our primary assistance to Pat was with her credit card debt. She held a card with a major bank but the debt, of nearly $10,000, had been sold to a debt collector which was now regularly calling her. Pat reported feeling harassed, which was increasing her distress on top of her precarious living situation.

We rang the bank with Pat to see if we could sort out a hardship arrangement to give her some breathing space. The bank agreed to recall Pat’s debt from the debt collector so it could explore her situation further. We helped obtain and supply the bank with a medical certificate and money plan for Pat. The bank reviewed the new documents and agreed to waive her card debts on compassionate grounds. The process took only three weeks as Pat’s situation was so clearly one of hardship.

Pat was grateful and encouraged by the resolution and commented that Financial Rights was the only service who had followed through to help her. We closed Pat’s file as we had provided all the help we were able to but it is our sincere hope that Pat’s life situation improves and that the debt waiver means  she has one less stress to deal with.


2- Banking and insurance Royal Commission: what happened and what it means for the sector and callers?

The year-long Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has concluded and the final report has been released. You can read it online here. Hayne’s landmark report has recommended closing many of the regulatory gaps and loopholes, removing conflicted remuneration and putting culture, consumer protection and misconduct risk at the heart of both industry self reflection and regulatory oversight.

While we were disappointed that some recommendations did not go far enough, such as improving remedies for breaches of responsible lending law and banning junk products, overall it’s a solid blueprint for reforming a sector that has held consumers in contempt for too long

We are also pleased to see support for improved funding for financial counselling and legal assistance services and will engage closely with the Treasurer’s recently announced review. These services are vital to even the playing field for consumers when faced with financial industry misconduct.

Financial Rights, its management and staff, made significant contributions to this Royal commission. The law reform work we undertook with our consumer representative colleagues over many years prior to the Royal commission built a substantial case for the inquiry. Our centre was also able to bring systemic issues and specific instances of injustice and misconduct to the attention of the Commissioner and his team – helping affected Australian have a real voice in the process.

Despite this work and the release of the final Report, there remains much to do to ensure the Royal Commission’s findings and lessons result in lasting benefits to consumers. Financial Rights will continue its engagement with government to ensure that Hayne’s recommendations are adopted. It is critical we balance out the efforts of industry lobbyists, whose influence Karen Cox wrote about in the national media the day after the final report’s release.

We will continue to identify and draw attention to ongoing systemic failures represented in the Financial Services Royal Commission so that the need for reform is not forgotten. And finally we will keep Australian consumers informed about their financial rights and any improvements to the law when recommendations are adopted.

Financial Rights’ submissions and responses

You can read Financial Rights’ official responses to various aspects of the Commissioner’s final report, made in Canberra on February 4, here on our website.

You can also read our initial submission to the Royal Commission here, our submission ahead of the insurance hearings here and our submission to the interim report here.

You can also read, listen or watch a selection of Financial Rights responses in the media to the Royal Commission here:

  • On ABC television 7.30 program, Tuesday February 5 here
  • On ABC Radio’s PM program here
  • In The Sydney Morning Herald, The Age and Canberra Times here
  • In an Australian Associated Press (AAP) report here
  • On ABC 702’s Breakfast program here (listen from: 1hr 06 mins)

3-  Funeral insurance: what to do if you have concerns

Some of the most damning evidence heard at the Financial Services Royal Commission was during hearings into businesses providing funeral insurance.

What emerged was at times shocking and in particular, how the product targeted Aboriginal communities. The Commissioner Kenneth Hayne suggested that funeral insurance offers “little value” to consumers, and though he stopped short of banning it, he recommended that cold calls to persuade people to take out new policies should be banned.

What if you or your client already has a policy? What should you keep in mind?

At Financial Rights’ in-house Insurance Law Service (ILS) we speak to many people who are unable to afford their premiums which are usually ‘stepped’ and increase with age. Even if you could afford the premiums when you took out the policy, you may not be able to afford them as you get older. If you are unable to pay your premiums, your policy may be cancelled and usually, your premiums are not refunded.

Even if you are able to maintain the premiums, often the total premiums paid will far exceed the costs of a funeral.

Funeral insurers tend to advertise heavily during the day and talk up the low initial premiums and the impact of your death being a financial strain. This can lead people to take out policies without thinking long term about their needs or future costs.

There are also confusing differences between funeral insurance and funeral expenses products.

Financial Rights regularly assists people making complaints to the Australian Financial Complaints Authority (AFCA) regarding the conduct of insurers.  Recently, we have been assisting a number of people through Mob Strong Debt Help who had signed up to funeral expenses policies and  found themselves having paid significantly more then the benefit they were ever likely to receive.

Aboriginal and Torres Strait Islander consumers are disproportionately affected because of “sorry business” in the community. The rituals observed during a period of mourning mean the prospect of being able to insure against these costs is attractive.

It’s important to be aware that there are alternatives to funeral insurance, including high-interest savings account, pre-paid funeral or your superannuation.

If you have any concerns about your policy, you can contact our Insurance Law Service helpline on 1300 663 464. You can ask to speak with an Aboriginal solicitor if you prefer. You can also refer to our online fact sheet (“R.I.P off! Why you don’t need funeral insurance”). We can give you advice about whether you may have been misled by an insurance company when you purchased cover and whether there is anything you can do about it.

4- Financial Rights joins the reconciliation movement

Financial Rights is proud to announce that on 11 October, 2018 we formally launched our Reflect Reconciliation Action Plan (RAP).

The purpose of a RAP is to provide an organisation with a structured approach to advancing reconciliation. RAPs recognize that Aboriginal and Torres Strait Islander peoples face significant structural disadvantage and discrimination in Australian society, and RAPs set out blueprints for organisations to commit to advancing reconciliation. Our RAP is our commitment to taking practical actions to develop respectful relationships and create meaningful opportunities with Aboriginal and Torres Strait Islander peoples.

As laid out in our RAP, “our vision for reconciliation is for all Aboriginal and Torres Strait Islander peoples to understand and be able to enforce their financial rights. We aim to be a trusted adviser and advocate for Aboriginal and Torres Strait Islander peoples in financial stress within our areas of expertise.”

The Financial Rights RAP is a one-year Reflect RAP, valid until October 2019. A Reflect RAP lays the groundwork for an organisation’s reconciliation journey and sets out steps the organisation must take to prepare for reconciliation initiatives in future RAPs.

The deliverables for us to complete under this RAP include:

– Preparation for relationship building with Aboriginal and Torres Strait Islander peoples, communities and organisations,

– raising awareness of our RAP; participating in National Reconciliation Week (May 27 to June 3, 2019) and NAIDOC Week (July 7 to 14, 2019),

– investigating opportunities to expand our use of a range of Aboriginal and Torres Strait Islander suppliers,

– updating organisational policies and procedures to improve cultural safety, and

– providing professional development and support options for Aboriginal and Torres Strait Islander staff and advisory committee members.

Throughout the year we will complete and report against our deliverables, in preparation for the development of a new RAP in late 2019 based on our learnings, challenges and achievements. Stay tuned throughout the year for more updates on our RAP progress.

5- NEW: ‘Buy now pay later’ fact sheet online

Buy now pay later (BNPL) services have been widely embraced by consumers as a trendy new payment method, but like any new players in the financial services sector, scrutiny of the pros and cons is appropriate.

There is no doubt that with many users of the services not subjected to responsible lending checks, some people will run into financial trouble. This was acknowledged with BNPL included in the Federal Government’s Senate inquiry ‘Credit and financial services targeted at Australians at risk of financial hardship’. The name of that inquiry – which was due to release a report in late February – said it all really. Our submission to that inquiry includes our position on BNPL services and can be read here.

We produced a fact sheet on ‘buy now pay later services’ to explain some of the risks. You can view it online or print it from here.

6- Important personnel changes at Financial Rights

There have been several personnel changes at the Financial Rights Legal Centre following a review of our service in 2017 to assist and manage growth of our services.

The changes are: 

  • Karen Cox, previously the centre Coordinator, has been appointed to the new role of Chief Executive Officer. She will continue to lead Financial Rights with a primary focus on strategic direction.
  •  Michael Feeney has been appointed to the new role of Chief Operations Officer, supporting the CEO in managing the Financial Rights Legal Centre. Specifically, Michael will ensure the centre has sufficient resources, systems, facilities and procedures to effectively meet its objectives. Previously Michael was the Director of Strategic Change and Community Sector Engagement with the NSW Department of Family and Community Services and helped during the department’s transition to the National Disability Insurance Scheme.
  •  Alexandra Kelly has been appointed to the new role of Director of Casework, leading Financial Rights’ legal and financial counselling casework practice. Alex will play a lead role in our ongoing work on systemic advocacy and identifying solutions to systemic problems, including strategic litigation where appropriate. She will also manage staff in relation to their casework.
  •  Alice Lin has been appointed to the new role of Director of Advice, leading Financial Rights’ high volume legal and financial counselling advice practice. Alice will play a lead role in ensuring advice quality and access to our services, the identification of systemic issues and management of staff in relation to advice and minor tasks.

Alexandra previously held the role of Principal Solicitor for the centre, which has been superseded by the two new legal director roles detailed above. Alice was previously a senior solicitor at Financial Rights and will be replaced by a new solicitor.

Financial Rights Management Committee was represented on three panels responsible for the selection of new key management positions and in the case of our two new legal director roles, an independent panel member from outside of the organisation was invited to participate.

Updated February, 2019.